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Soft 20-Year Auction Applies Some Light Pressure

JGBS

Richness in outright terms and on the curve keep demand subdued at the latest round of 20-Year JGB supply, with the cover ratio barely topping the level seen at the prior 20-Year JGB auction (which represented the lowest showing since ’12). Worry re: the potential for BoJ policy tweaks in the months ahead probably further capped demand. The low price at the auction missed expectations (which stood at 100.10, per the BBG dealer poll). JGB futures cheapen away from best levels post-auction, but recover from initial reaction lows, while cash 20s give up a chunk of their earlier outperformance and cheapen on the 10-/20-/30-Year butterfly, pulling the remainder of the super-long end away from best levels in the process.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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